To claim ITC under GST, you must possess the following documents:

• Tax invoice issued by the supplier of goods or services in accordance with the provisions of Section 31 of the CGST Act 
• Invoice issued under specific circumstances:
  • Bill of supply issued instead of a tax invoice if the total amount is less than Rs. 200 or in situations where the reverse charge mechanism applies.
  • Invoice or credit note issued by an Input Service Distributor (ISD) as per the invoice rules under GST.
• Debit note issued by the supplier, if applicable, in accordance with the provisions of Section 34 of the CGST Act.
• Bill of entry or similar document :This is required for claiming ITC on imported goods and should be issued by the Customs Department under the Customs Act, 1962.

In addition to possessing the above documents, you must fulfill the following conditions:

• You are a registered taxpayer under GST.
• The goods or services have been received and used or will be used for making taxable supplies.
• The tax charged on the invoice has been paid by the supplier to the government.
• You have filed the relevant GST return (GSTR-1) reflecting the invoice details.
• You have received the reflected ITC amount in your GSTR-2B form.
• For claiming ITC on capital goods, the tax paid needs to be reduced by 5% per quarter or part thereof from the invoice date.
• You have paid the full invoice value, including GST, to the supplier within 180 days from the invoice date. Failing to do so will lead to reversing the claimed ITC and paying interest.

                                                  EXAMPLE

Claiming Input Tax Credit (ITC) under GST 2017 in India: An Example

While the Goods and Services Tax (GST) is a central government law, the specific rates and certain other provisions can vary slightly across different states in India. However, the general requirements and conditions for claiming Input Tax Credit (ITC) remain largely uniform. Here’s an example considering the state of Tamil Nadu:

Scenario:

• A registered GST taxpayer in Tamil Nadu purchases raw materials worth ₹10,000 (inclusive of 18% GST) from a supplier in the same state.

Documentary Requirements:

1. Tax Invoice: The taxpayer must possess a valid tax invoice issued by the supplier. This invoice should contain details like:
   • Name, address, and GSTIN of both the supplier and recipient
   • Description of goods/services supplied
   • Total value of supply
   • Rate and amount of GST charged
2. Payment Proof: The taxpayer must have proof of payment for the goods/services, such as bank statement, credit card statement, etc.

Conditions for Claiming ITC:

1. Registered taxpayer :Only businesses registered under GST can claim ITC.
2. Use for business purposes: The purchased goods/services must be used for further supply (sale) or be used in the course of the business. ITC cannot be claimed for personal consumption.
3. Tax payment by supplier: The supplier must have paid the GST collected to the government. This can be verified through the supplier’s tax filings, often reflected in the taxpayer’s GSTR-2B report.
4. Return filing: The taxpayer must have filed their GST return for the period in which the ITC is claimed.

Additional Points:

• Time limit: ITC can generally be claimed within one year from the date of invoice receipt.
• Specific state provisions: While the core framework remains the same, Tamil Nadu might have specific notifications or clarifications regarding ITC in certain situations. Consulting a tax professional or referring to official government updates is recommended for the latest information.

FAQ QUESTIONS

Claiming Input Tax Credit (ITC) allows you to reduce the amount of GST you pay on your output supplies. However, to claim ITC, you must fulfill certain documentary requirements and conditions as mandated by the GST Act and Rules.

Documentary Requirements:

• Tax invoice: Issued by the supplier of goods or services in accordance with the provisions of Section 31 of the CGST Act 
• Invoice issued under specific circumstances: This includes bills of supply issued for supplies below Rs. 200 or in situations where the reverse charge mechanism applies.
• Debit note :Issued by the supplier in accordance with the provisions of Section 34 of the CGST Act.
• Bill of entry:Or any similar document prescribed under the Customs Act, 1962, for claiming ITC on imported goods.
• ISD invoice/credit note :Issued by an Input Service Distributor (ISD) as per the invoice rules under GST.

Conditions for Claiming ITC:

• Registered under GST :Only registered taxable persons can claim ITC.
• Possession of valid tax invoice :You must have a valid tax invoice for the purchase.
• Receipt of goods/services: The goods or services must be received for business purposes.
• Tax payment by supplier :The supplier must have paid the tax charged on the supply to the government.
• Return filing: Both you and your supplier must have filed the prescribed GST returns.
• Payment to supplier: You must have paid the entire invoice value, including GST, to the supplier within 180 days of the invoice date. Failing to do so will lead to reversal of ITC claimed along with interest.
• Specific restrictions: ITC on certain goods and services like personal expenses, CSR activities, and high-sea sales is not allowed.

CASE LAWS

While case laws are not explicitly mentioned in the Central Goods and Services Tax (CGST) Act, 2017 or the related rules, they can be used to interpret the provisions and understand how they have been applied in specific situations. Here’s a summary of the documentary requirements and conditions for claiming ITC under GST 2017 based on the relevant provisions:

Documentary Requirements:

As per Section 16(2)(a) of the CGST Act, 2017, a registered person can claim ITC only if they possess one of the following documents:

• Tax invoice or debit note: Issued by a supplier registered under the Act, in accordance with Section 31 or 34 respectively.
• Bill of entry or similar document: Prescribed under the Customs Act, 1962 for the assessment of integrated tax on imports.
• Input Service Distributor (ISD) invoice, credit note, or similar document: Issued by an ISD in accordance with the provisions of Rule 54.

Conditions for Claiming ITC:

In addition to possessing the above documents, the following conditions must be met for claiming ITC:

• The goods or services must be received and used for taxable supplies :ITC cannot be claimed on personal or exempt supplies.
• The tax has been paid to the supplier: The registered person must have paid the tax charged by the supplier within 180 days from the invoice date. If not, the claimed ITC needs to be reversed and paid to the government along with interest.
• The relevant information is furnished in GSTR-2:Details of the tax invoice, debit note, or other document must be reflected in the registered person’s GSTR-2 return for the month in which the ITC is claimed.
• Time limit for claiming ITC: The ITC must be claimed within the financial year to which the invoice or document pertains.